Category: Economics

Does soil heterogeneity induce greater individualism?

Itzchak Tzachi Raz says maybe so:

This paper studies the impact of social learning on the formation of close-knit communities. It provides empirical support to the hypothesis, put forth by the historian Fred Shannon in 1945, that local soil heterogeneity limited the ability of American farmers to learn from the experience of their neighbors, and that this contributed to their “traditional individualism.” Consistent with this hypothesis, I establish that historically, U.S. counties with a higher degree of soil heterogeneity displayed weaker communal ties. I provide causal evidence on the formation of this pattern in a Difference-in-Differences framework, documenting a reduction in the strength of farmers’ communal ties following migration to a soil-heterogeneous county, relative to farmers that moved to a soil-homogeneous county. Using the same design, I also show that soil heterogeneity did not affect the social ties of non-farmers. The impact of soil heterogeneity is long-lasting, still affecting culture today. These findings suggest that, while understudied, social learning is an important determinant of culture.

Here is the full paper.  See also his paper on homesteading: “…we find that areas with greater historical exposure to homesteading are poorer and more rural today.”

Half-Doses as Good as Full?

NYTimes: A top official of Operation Warp Speed floated a new idea on Sunday for stretching the limited number of Covid-19 vaccine doses in the United States: Halving the dose of each shot of Moderna’s vaccine to potentially double the number of people who could receive it.

Data from Moderna’s clinical trials demonstrated that people between the ages of 18 and 55 who received two 50-microgram doses showed an “identical immune response” to the standard of two 100-microgram doses, said the official, Dr. Moncef Slaoui.

Dr. Slaoui said that Operation Warp Speed was in discussions with the Food and Drug Administration and the pharmaceutical company Moderna over implementing the half-dose regimen. Moderna did not respond immediately to a request for comment.

Each vaccine would still be delivered in two, on-schedule doses four weeks apart, Dr. Slaoui said in an interview with “CBS’s Face the Nation.” He said it would be up to the F.D.A. to decide whether to move forward with the plan.

Half dosing would double Moderna doses permanently rather than temporarily (as with First Doses First). Thus, I would be very happy to see half-dosing and it would obviate the need for FDF.

I and a handful of others started to discuss and advocate First Doses First on Dec. 8 and many times since then. The advocacy was then joined by Tony Blair and by many epidemiologists, immunologists, vaccine researchers, physicians and public health experts as well, of course, by the British experts on the Joint Committee on Vaccination and Immunisation. It’s clear that the FDA and Operation Warp Speed are now feeling the pressure to take some serious actions to increase supply. If so, my small efforts will have had a very high return.

Keep the pressure on.

Addendum: By the way, the British have yet to approve the Moderna vaccine (probably because they can’t get doses for some time anyway) and the AstraZeneca vaccine appears to work better with a longer dosing interval. So FDF makes sense for the British and we can do half-dosing on Moderna, potentially setting a new and beneficial standard for the entire world.

The Best Movies and Television Shows about Invention

Anton Howes, author of the excellent Arts and Minds: How the Royal Society of Arts Changed a Nation, asked on twitter about the best movies and televisions shows about invention. Here’s the collated list.

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Anton started watching Pad Man, which is on Netflix and loved it. It’s based on the true story of a man who invented a cheap way of making sanitary pads for women in India which I was familiar with, from the TED talk, but I didn’t know about the movie. It is excellent! Great story, especially strong on the costs of innovating when the inventor must overcome social ostracism and ridicule as well as the difficulties with creating the invention itself. Also some great shots of Maheshwar India.

Hail Britannia!

The British approved the Pfizer vaccine, they approved the AstraZeneca vaccine, they moved to first doses first and now they are allowing (not yet encouraging they are running a trial) mix and match. Under the present circumstances, the British focus on doing what it takes to save lives is smart, admirable, and impressive.

As I wrote on Dec. 10, in Herd Immunity is Herd Immunity:

Mix and matching has two potentially good properties. First, mix and matching could make the immune system response stronger than either vaccine alone because different vaccines stimulate the immune system in different ways. Second, it could help with distribution. It’s going to be easier to scale up the AZ vaccine than the mRNA vaccines, so if we can use both widely we can get more bang for our shot.

Addendum: The CDC is projecting 80,000 COVID deaths in the United States over the next three weeks.

The New Strain and the Need for Speed

I was going to write a long blog post on the new strain but Zeynep Tufekci has written an excellent piece for The Atlantic. I will quote from it and add a few points.

One of the big virtues of mRNA vaccines is that much like switching a bottling plant from Sprite to 7-Up we could tweak the formula and produce a new vaccine using exactly the same manufacturing plants. Moreover, Marks and Hahn at the FDA have said that the FDA would not require new clinical trials for safety and efficacy just smaller, shorter trials for immune response (similarly we don’t do new large-scale clinical trials for every iteration of the flu vaccine.) Thus, if we needed it, we could modify mRNA vaccines (not other types) for a new variant in say 8-12 weeks. As Zeynep notes, however, the vaccines are very likely to work well for the new variant. It’s nice to know, however, that we do have some flexibility.

The real worry is not that the vaccines won’t work but that we won’t get them into arms fast enough. We were already going too slow but in a race against the new more transmissible variant we are looking like tortoises.

A more transmissible variant of COVID-19 is a potential catastrophe in and of itself. If anything, given the stage in the pandemic we are at, a more transmissible variant is in some ways much more dangerous than a more severe variant. That’s because higher transmissibility subjects us to a more contagious virus spreading with exponential growth, whereas the risk from increased severity would have increased in a linear manner, affecting only those infected.

Here’s a key example from epidemiologist Adam Kucharski:

As an example, suppose current R=1.1, infection fatality risk is 0.8%, generation time is 6 days, and 10k people infected (plausible for many European cities recently). So we’d expect 10000 x 1.1^5 x 0.8% = 129 eventual new fatalities after a month of spread. What happens if fatality risk increases by 50%? By above, we’d expect 10000 x 1.1^5 x (0.8% x 1.5) = 193 new fatalities.

Now suppose transmissibility increases by 50%. By above, we’d expect 10000 x (1.1 x 1.5)^5 x 0.8% = 978 eventual new fatalities after a month of spread.

the key message: an increase in something that grows exponentially (i.e. transmission) can have far more effect than the same proportional increase in something that just scales an outcome (i.e. severity).

I argued that the FDA should have approved the Pfizer vaccine, on a revocable basis, as soon as the data on the safety and efficacy of its vaccine were made available around Nov. 20. But the FDA scheduled it’s meeting of experts for weeks later and didn’t approve until Dec. 11, even as thousands of people were dying daily. We could have been weeks ahead of where we are today. Now the epidemiologists are telling us that weeks are critical. As Zeynep notes holding back second doses looks like a clear mistake and the balance of the evidence also suggests we should move to first doses first:

All this means that the speed of the vaccine rollout is of enormous importance.

…Meanwhile, the United States was reportedly planning to hold back half the vaccine it has in freezers as a hedge against supply-chain issues, and some states may be slowed down by murky prioritization plans. Scott Gottlieb—the former FDA chief and a current board member of Pfizer—has argued that the U.S. should also go ahead with vaccinating as many people as possible right now and trust that the supply chain will be there for the booster. Researchers in Canada—where some provinces decided to vaccinate now as much as possible without holding half in reserve, and will administer the booster with future supplies—estimate that this type of front-loading can help “avert between 34 and 42 per cent more symptomatic coronavirus infections, compared with a strategy of keeping half the shipments in reserve.” (Note that this strategy, which is different from the one the United Kingdom just announced it will adopt in prioritizing the first dose, does not even necessarily involve explicitly changing booster timing protocols in order to maximize vaccination now; it just means not waiting to get shots into arms when the vaccines are currently available.) These were already important conversations to have, but given the threat posed by this new variant, they are even more urgent.

Perhaps most critically, the FDA should approve the AstraZeneca vaccine if not as part of Operation Warp Speed then on a right to try basis. We need every weapon in the arsenal. How many times must we learn not to play with exponential matches?

Addendum: See also this excellent Miles Kimball post, How Perfectionism Has Made the Pandemic Worse.

X-inefficiency is an underrated idea

Here is Harvey Leibenstein from way back when:

Complete constraint concern is the same as maximization. Selective rationality usually involves less than complete constraint concern. Also, there is a tradeoff between less constraint concern and more internalized pressure that an individual feels as a consequence of less concern. Thus an individual’s personality will determine the combination of degree of constraint concern and pressure he or she would like to choose — one that he feels most comfortable with. In general the individual strikes a compromise between the way he would like to behave (very low constraint concern) and the way he feels he ought to behave, which depends on internalized standards for performance and external pressures. This implies that individuals do not necessarily or usually pursue gains to be obtained from an opportunity to a maximum degree or marshal information to an optimal degree; also, maximizing behavior is a special case in this system.

…Thus personality and context select, so to speak, the degree of rationality that will control an individual’s decision-making (and performing) behavior.

A competitive environment may not eliminate X-inefficiency for at least two reasons. First, “There may be a lack of supply of the right kind of entrepreneurs.”  Second, firms may engage in rent-sheltering activities instead.

Inertia and peer groups also were central ideas in Leibenstein’s theory, and you can see both factors at work today, or sometimes not at work, in our response to various emergencies.  You will note this framework may help explain why the responses of our national, state, and local governments can vary so much in quality, depending on the issue.

Leibenstein was still at Harvard when I studied there, but word was that he himself had “gone X-inefficiency” and decided to stop producing.  Here are Dean and Perlman with an appreciation of Leibenstein.  As for Leibenstein’s key piece on x-inefficiency: “Between 1969 and 1980, the article was the third most frequently cited in the Social Science Citation Index.”  Today it is virtually forgotten.

Welcome to another year of MR!

Blaming the states yes I do you should too

States and local public health officials have warned for months that they would need more than $8 billion in additional funding to stand up the infrastructure needed to administer vaccines. The Trump administration instead provided states $340 million in funding to prepare for vaccinations. Congressional lawmakers also balked for months at appropriating additional funding for vaccine distribution, although the coronavirus stimulus package signed by President Trump on Sunday included $8 billion in funding for that effort.

That is from a recent StatNews article.  Now I gladly would have expanded the federal contribution, by several times over if need be.  But people, let us put this in perspective.  First, the states got the $8 billion they were asking for.  Yes, the delay is very very bad, but let’s say they had come up with $8 billion on their own several months ago.

Total state and local spending is about $3.7 trillion, $2.3 trillion from the states alone.  $8 billion is how much of that?

About one-third of one percent.

Our states cannot come up with one third of one percent of their budgets to meet the greatest emergency in my lifetime?

This has been a pandemic of outrages, but this undercovered issue is one of the very largest of those outrages.  Heaven forbid that states should have to take a sliver of their budget away from deserving recipients.  To so many people this is simply unthinkable, and I mean that word in a very literal sense.

(And yes I do know this year is especially tight on state budgets, etc.  But even if those budgets were cut to a third of their normal level — hardly the case — that is still only one percent of state budgets.)

The other outrage is how few people have been willing to criticize the states for not having done better fiscal planning here.  You will find many deserved criticisms of Trump on this, but there is more than one line of defense, or at least there is supposed to be.  So yes, you should be mad at the states.

Jeff Holmes does a CWT with Tyler

Here is the summary:

On this special year-in-review episode, producer Jeff Holmes sat down with Tyler to talk about the most popular — and most underrated — episodes, Tyler’s personal highlight of the year, how well state capacity libertarianism has fared, a new food rule for ordering well during the pandemic, how his production function changed this year, why he got sick of pickles, when he thinks the next face-to-face recording will be, the first thing he’ll do post vaccine, an update on his next book, and more.

Here is the full dialogue, with audio and transcript, here is one short excerpt:

I also tell you what I thought of the guests we had on for the year, and also which episode had the most downloads.  Self-recommended.

And if you have enjoyed this year in Conversations, please consider donating here before the end of the year.  Thank you!

Most Popular MR Posts of the Year

Here is a selection of the most popular MR posts of 2020. COVID was a big of course. Let’s start with Tyler’s post warning that herd immunity was fragile because it holds only “for the current configuration of social relations”. Absolutely correct.

The fragility of herd immunity

Tyler also predicted the pandemic yo-yo and Tyler’s post (or was it Tyrone?) What does this economist think of epidemiologists? was popular.

Tyler has an amazing ability to be ahead of the curve. A case in point, What libertarianism has become and will become — State Capacity Libertarianism was written on January 1 of last year, before anyone was talking about pandemics! State capacity libertarianism became my leitmotif for the year. I worked with Kremer on pushing government to use market incentives to increase vaccine supply and at the same repeatedly demanded that the FDA move faster and stop prohibiting people from taking vaccines or using rapid tests. As I put it;

Fake libertarians whine about masks. Real libertarians assert the right to medical self-defense and demand access to vaccines on a right to try basis.

See my 2015 post Is the FDA Too Conservative or Too Aggressive for a good review of ideas on the FDA. A silver lining of the pandemic may be that more people realize that FDA delay kills.

My historical posts the The Forgotten Recession and Pandemic of 1957 and What Worked in 1918? and the frightening The Lasting Effects of the the 1918 Influenza Pandemic were well linked.

Outside of COVID, Tyler’s 2005 post Why did so many Germans support Hitler? suddenly attracted a lot of interest. I wonder why?

Policing was also popular including my post Why Are the Police in Charge of Road Safety? which called for unbundling the police and my post Underpoliced and Overprisoned revisited.

Tyler’s great post The economic policy of Elizabeth Warren remains more relevant than I would like. On a more positive note see Tyler’s post Best Non-Fiction Books of the Year.

One of the most popular posts of the year and my most popular post was The Gaslighting of Parasite.

But the post attracting the most page views in 2020 by far, however, was Tyler’s and it was…

  1. John Brennan on UFOs.

You people are weird. Don’t expect more UFO content this year. Unless, well you know.

*The Trouble with Tribbles*

Yes, another Star Trek episode.  This one was striking for its explicit Malthusianism (!).  The tribbles increase “arithmetically,” to use Malthus’s term — Spock notes that one tribble (bisexually) breeds on average ten tribbles a mere twelve hours later.  And what is it that the tribbles end up doing?  Trying to eat away a fixed supply of grain.  Yes, grain.  Might the tribbles exercise Malthusian moral restraint by opting for a later age of marriage and reproduction?  No, they are born pregnant.  Again, as Malthus suggests, a plague (poisoning) intervenes.

Why bitcoin will not take over the world

Yes it is here to stay, and it is not a bubble, but…here is one part of the argument:

If you hold or trade with a stablecoin, you incur several risks. First, the stablecoin peg to the dollar may someday be broken, an old problem with pegged exchange rates that Milton Friedman often warned about. Second, to the extent stablecoins and other crypto assets become a major part of the financial system, they will attract more regulatory interest. That in turn will limit many of their advantages over the traditional bank sector. The U.S. government does not want a financial system that evolves outside the purview of the Federal Reserve, FDIC and other regulatory institutions.

Third, the formal banking sector will improve, for instance by moving to more rapid clearing, or by introducing electronic reserve currencies. With the latter, you could transfer your electronically-based dollars within the accounting system of the central bank, and achieve a non-intermediated transfer without resorting to crypto. It is not obvious that crypto will be the market winner once more mainstream institutions learn some lessons from the success of crypto.

And in sum:

The more utopian scenarios for crypto, whether proponents realize it or not, rely on the notion that crypto remains simultaneously fringe and mainstream. That will be a hard trick to pull off.

Your rebuttals, and more, are considered at the link to my latest Bloomberg column.

Silvio Gesell’s “stamped vaccine” plan

There are now so many more vaccines distributed than injected into American arms.  How about a simple incentive scheme?  Let’s say you are in group 1A.  You have to come get your vaccine by Jan.3 (??), or otherwise you lose your place in line and are put back into the general pool.  (I’ve heard one report from Israel that non-vaccination leads to cancellation of your health insurance, but this I cannot confirm.)  We can then move onto group 1B more quickly.

And if you are willing to postpone your second shot for three months…

The Omission-Commission Error is Deadly

Britain will start a human challenge trial in January.

The Sun: Imperial College said its joint human challenge study involves volunteers aged 18 to 30, with the project starting in January – and results expected in May.

Initially, 90 volunteers will be given a dose of an experimental nasal vaccine.

They’ll then be deliberately infected with Covid-19.

But this is really just the first part of an excessively cautious study designed to “discover the smallest amount of virus it takes to cause a person to develop Covid-19 infection.” Moreover:

… it’s taken a few months to come to fruition, as before any research could begin the study had to be approved by ethics committees and regulators.

The omission-commission error is deadly. Notice that giving less than one hundred volunteers the virus (commission) is ethically fraught and takes months of debate before one can get approval. But running a large randomized controlled trial in which tens of thousands of people are exposed to the virus is A-ok even though more people may be infected in the latter case than the former and even though faster clinical trials could save many lives. Ethical madness.

Larry Summers on the cash payments

The data are striking. Total employee compensation is now running only about $30 billion per month behind the pre-Covid baseline. Measures in the congressional stimulus bill to strengthen unemployment insurance and to support business will add about $150 billion a month to household income in order to replace all this loss.

The question is whether there is a rationale for further tax rebate of more than $200 billion a month over the next quarter. This would represent additional support equal to an additional seven times the loss of household wage and salary income over the next quarter.

Here is the full Bloomberg piece, file under “questions that are rarely asked.”